Newsflash: Market Continues to Work

Posted on by Matt Simpson

James Fussel has an excellent article in the Kansas City Star detailing some of the potential avenues for combating rising fuel costs in the long term. If you take just one thing away from the article, it’s that there has been a flurry of innovation as gas prices have risen. From plug-in hybrid cars to pure electric cars to hyrdrogen fuel cell cars, small breakthroughs have been made across the board in attempts provide cheaper alternatives to conventional gas-powered cars.

This is precisely what we should expect from a well-functioning market. As the price of gas increases, it becomes more profitable to both conserve and seek out alternatives. The practical result is exactly what we’ve seen. Consumers are buying more fuel-efficient cars while producers are looking for ways to make cars more fuel-efficient, as well as seeking alternatives to gasoline.

This is all occurring despite misguided political efforts, such as Missouri’s E-10 mandate. I shouldn’t have to point out that ethanol was not mentioned in the Star‘s article as one of the promising new technologies. A better strategy for lawmakers would be to cultivate the competitive environment that is necessary for the innovation we are seeing. In other words, enforce property rights and that’s it. Any attempt to "fix" the market is apt to cause worse problems than it solves.

Rural, Ruralness, Rurality

Posted on by Audrey Spalding

There is no universally applicable definition of "rural." But there are some consistent images: few people in a large area, fairly low levels of education, higher rates of poverty, a tight-knit community, and — let’s just say it — farmers.

The Census Bureau has come up with some criteria. To simplify, a place is "rural" if it has fewer than 500 people per square mile. The census can, and will, classify a place as partly rural and partly urban.

The few times we do talk about public education in rural areas, the census is not the be-all-and-end-all. The definition used depends on the author. Is Missouri rural? As someone who grew up in a large Michigan city, my knee-jerk reaction has been, "of course."

In reality (rurality?), about 25 percent of Missouri’s student-age population is rural. That’s the 15th-largest percentage of the 50 states, according to a 2007 study by the Rural Schools and Community Trust.

In fact, much of the United States itself is rural. In any given state, a fairly large percentage of students attend rural school districts.

Continue reading “Rural, Ruralness, Rurality”

Ed Emery Echoes SMI’s Concerns

Posted on by Matt Simpson

In a Joplin Independent op-ed, Missouri Rep. Ed Emery has a familiar concern with the state’s ethanol mandate. He has noticed a 10-percent decrease in his car’s fuel efficiency since gas stations began switching to a 90/10 gasoline/ethanol blend in anticipation of the E-10 mandate going into effect.

The Show-Me Institute recently took this decrease in efficiency into account in a study on the impact of the ethanol mandate. The key conclusion of both Emery’s piece and the study is that consumers are getting the shaft both because of the subsidy and the loss of fuel efficiency. We should expect no less when government actors intervene in the marketplace.

Emery sums up the empirical evidence nicely:

Historically, government mandates do not represent good compromise; they violate market forces, pick winners and losers, and frustrate technological progress-all bad for the consumer.

Kelo v. New London, Three Years Later

Posted on by Dave Roland

On June 23, 2005, the U.S. Supreme Court dealt a devastating blow to our Constitution, ruling in a 5-4 decision that Americans only have a right to keep their homes, businesses, and houses of worship until their government decides a new owner would generate more tax revenue.  As Justice Sandra Day O’Connor pointed out in her dissent, the majority’s ruling in Kelo v. New London means that "[t]he specter of condemnation hangs over all property. Nothing is to prevent the State from replacing any Motel 6 with a Ritz-Carlton, any home with a shopping mall, or any farm with a factory."

The public’s reaction to the Kelo decision was immediate and impassioned, making the case one of the most reviled Supreme Court opinions in recent history. Citizens throughout the nation demanded that their state governments act to make sure their property rights were secure. As a result, 42 states passed at least one bill in response to Kelo, although some bills (such as the eminent domain "reform" passed in Missouri) were far less effective than others.

Regrettably, the Supreme Court marked this anniversary by announcing today that it will not consider a case that might have given them the chance to scale back some of the damage done by Kelo. Suzette Kelo, on the other hand, is helping to spearhead the continuing effort to see property rights protected in this country, and she was present for the grand reopening of the little pink house that was at the center of the controversy. It has been relocated to another part of the city, where it will stand as a monument to the struggle that she and her neighbors shared with hundreds of thousands of their fellow citizens who are threatened with eminent domain. And, perhaps unsurprisingly, three years after New London won its case by persuading five justices that the displacement of these tax-paying property owners was necessary to complete the city’s revitalization, the "redevelopment site" remains a wasteland.

Hedging a Bet

Posted on by Dan Grana

The Southeast Missourian reports that the potential ban on casino construction might cost local developers a promising opportunity in Cape Girardeau:

Because companies already operating casinos in Missouri are sponsoring the ballot measure through an initiative petition and have refused to negotiate for a share in the Cape Girardeau project, [businessman David] Knight said he must attract an out-of-state casino operator to take part. He intends to have an application ready if the ballot measure fails to make the ballot or if voters reject the proposal.

“We’ve got nobody left in Missouri to talk to,” Knight said. “We are proceeding on in the meantime and getting a gaming partner.”

Thanks to the rhetoric-charged protectionism of the initiative and the short-term moratorium it spawned, Missouri stands to lose a large development to out-of-state builders. It appears that although no one in-state is willing to begin a project that faces considerable risk of being legally prohibited in November, Mr. Knight will be able to find someone else who will help him build his casino. If the initiative never materializes as law, Missourians will watch as recent regulatory debacles negatively affect the state’s businesses. If ballot issue is passed, we will never know the damages caused to state revenues, recipients of casino taxes, and entrepreneurial individuals like Mr. Knight.

Just Plain Old Silly

Posted on by Justin Hauke

John McCain has proposed a $300 million prize to the first person who can develop an automobile battery that "far surpasses existing technology." In addition, U.S. automakers will receive a $5,000 tax credit for every zero-carbon-emissions car that they can develop and sell.

Well this is pretty vague. But more importantly, it’s really silly.

The incentive for alternative fuel technology already exists, and the first person to develop and market a practical alternative to the standard combustion engine will be rewarded much more than a mere $300 million. McCain argues that this would amount to about one dollar per U.S. citizen, and is "a small price to pay for helping to break the back of our oil dependency." I, personally, would be willing to pay a lot more than $1 for a practical alternative to fossil fuels. But no politician has the right to make that decision for me (or for any other taxpayer). The government shouldn’t be in the business of deciding good and bad business ideas. We already have a pretty good system in place to do just that.

Enforce the Existing Laws First

Posted on by Justin Hauke

A letter in the Springfield News-Leader urges the state’s congressional representatives to vote for the adoption of the Fairness in Nursing Home Arbitration Act, which would allow the families of nursing home residents to litigate disputes. This law would invalidate many of Missouri’s existing nursing home contracts, which require families to sign a mandatory arbitration clause in order to insure them against a lawsuit in the case of an injury or death.

I’ve written an op-ed about nursing home regulations before. In that article, I argued that nursing home abuses are very much a reality, but that additional regulation will only make long-term care coverage worse. Saint Louis currently enjoys having the second-lowest nursing home costs in the country, averaging $42,877 annually. Nationally, the average annual figure is $65,200, with costs as high as $191,385 in some states. This is a tremendous bill to foot for 10 or 15 years of potential care.

It’s very obvious why nursing homes require an arbitration clause. They are charged with ensuring the safety of residents who often are suffering from dementia or Alzheimer’s and may be largely a danger to themselves. The costs of litigating every potential event (whether or not it results from negligence by the nursing home) would be prohibitive, and would force many nursing homes out of business — only driving up the costs of long-term care.

This doesn’t mean that we should exonerate negligent health care workers. Many nursing home contracts are already in violation of existing laws. We should concentrate first on enforcing the laws on the books before driving up costs to the industry with little guarantee of improvement in service.

Stumbling in the Dark

Posted on by Matt Simpson

The Kirksville Daily Express reports that there are two main reasons why Missouri’s gubernatorial candidates are reluctant to make any transportation proposals:

First, any plan will require money.

This is dead wrong. If we assume that MoDOT has to build and maintain the roads, sure, any plan requires money. But why should we assume that? Another option would be to sell off some of Missouri’s roads to private developers who would be more responsive to market demand. Note that this would generate revenue rather than cost the state money. Although there are state constitutional issues that would need to be resolved before this could happen, it would generate some competition in the road market — which, if I recall correctly, has served the computer industry rather well in recent times.

Second, as even the Missouri Department of Transportation notes, there is no consensus on which transportation projects have both the greatest need and public desire — much less how to pay for them.

More of the perils of operating without a market system. Someone should read their Hayek. Nobody knows what the public wants because everyone in the road market — both state and local governments — can fail to meet consumer demand and get away with it. There is no incentive to find out what consumers want, so no one has the relevant information. Real live markets, on the other hand, have handy mechanisms for solving this problem — what Hayek called the knowledge problem. Prices convey all of this information in one neat aggregate number … in the absence of government intervention, anyway.

Perhaps reform is needed to get some of the government out of the transportation system so that prices are set free.

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